S.F. _____ Section 1. Section 542.3, subsection 11, Code 2016, is 1 amended to read as follows: 2 11. “License” means a certificate issued under section 542.6 3 or 542.19 , a permit issued under section 542.7 , or a license 4 issued under section 542.8 or 542.33 ; or a certificate, permit, 5 or license issued under corresponding prior law. 6 Sec. 2. Section 542.3, Code 2016, is amended by adding the 7 following new subsections: 8 NEW SUBSECTION . 13A. “Licensed tax consultant” means a 9 person who is licensed under this chapter to prepare, advise, 10 or assist in the preparation of income tax returns for another 11 and for valuable consideration. 12 NEW SUBSECTION . 13B. “Licensed tax preparer” means a person 13 who is licensed under this chapter to prepare, advise, or 14 assist in the preparation of income tax returns for another 15 and for valuable consideration while under the supervision of 16 a licensed tax consultant, attorney at law, certified public 17 accountant, licensed public accounting firm, or certified 18 public accounting firm. 19 Sec. 3. Section 542.4, subsection 9, paragraphs d, g, h, j, 20 k, and r, Code 2016, are amended to read as follows: 21 d. Rules specifying the educational and experience 22 qualifications required for the issuance of a license 23 under section sections 542.8 and 542.33 and the continuing 24 professional education required for renewal of a license under 25 section sections 542.8 and 542.39 . 26 g. Rules relating to actions discreditable to the 27 practice as a certified public accountant , or licensed public 28 accountant , licensed tax consultant, or licensed tax preparer . 29 h. Rules relating to professional confidences between a 30 certified public accountant , or licensed public accountant , 31 licensed tax consultant, or licensed tax preparer and a client. 32 j. Rules governing the failure to disclose a material fact 33 known to the certified public accountant , or licensed public 34 accountant , licensed tax consultant, or licensed tax preparer . 35 -1- LSB 5185XC (4) 86 gh/rj 1/ 17

S.F. _____ k. Rules relating to a material misstatement known to the 1 certified public accountant , or licensed public accountant , 2 licensed tax consultant, or licensed tax preparer . 3 r. Rules on substantial equivalency under section sections 4 542.19 and 542.35 . 5 Sec. 4. Section 542.4, subsection 9, Code 2016, is amended 6 by adding the following new paragraph: 7 NEW PARAGRAPH . 0q. Rules governing the manner and 8 circumstances of use of the titles “licensed tax consultant” 9 and “licensed tax preparer”. 10 Sec. 5. Section 542.14, subsections 1 and 2, Code 2016, are 11 amended to read as follows: 12 1. If, as a result of an investigation under section 542.11 13 or otherwise, the board believes that a person or firm has 14 engaged, or is about to engage, in an act or practice which 15 constitutes or will constitute a violation of section 542.13 , 16 or 542.20 , or 542.45 , the board may make application to the 17 district court for an order enjoining such act or practice. 18 Upon a showing by the board that such person or firm has 19 engaged, or is about to engage, in any such act or practice, 20 an injunction, restraining order, or other order as may be 21 appropriate shall be granted by the court. 22 2. In addition to a criminal penalty provided for in section 23 542.15 , the board may issue an order to require compliance with 24 section 542.13 , or 542.20 , or 542.45 or to revoke a practice 25 privilege under section 542.20 , and may impose a civil penalty 26 not to exceed one thousand dollars for each offense upon a 27 person who is not a licensee under this chapter and who engages 28 in conduct prohibited by section 542.13 , or 542.20 , or 542.45 . 29 Each day of a continued violation constitutes a separate 30 offense. The board may impose a penalty up to ten thousand 31 dollars per violation against a firm that violates section 32 542.13 , or 542.20 , or 542.45 . 33 Sec. 6. Section 542.15, subsection 1, Code 2016, is amended 34 to read as follows: 35 -2- LSB 5185XC (4) 86 gh/rj 2/ 17

S.F. _____ 1. A person who violates a provision of section 542.13 or 1 542.45 is guilty of a serious misdemeanor. 2 Sec. 7. NEW SECTION . 542.31 Licensed tax consultants and 3 tax preparers —— exceptions. 4 1. A person shall not engage in the practice of preparing, 5 advising, or assisting in the preparation of income tax returns 6 for another and for valuable consideration in the state unless 7 the person is a licensed tax consultant or a licensed tax 8 preparer as provided in this chapter, except as permitted by 9 subsection 2. 10 2. The provisions of sections 542.32 to 542.46, relating 11 to the licensure of tax consultants and tax preparers, do not 12 apply to the following individuals: 13 a. A full-time or part-time employee hired to fill a 14 permanent position, who in connection with the duties as an 15 employee has the incidental duty of preparing income tax 16 returns for the business of the employer only. 17 b. An attorney at law rendering services in the performance 18 of the duties of an attorney at law. 19 c. While acting as such, a fiduciary, or the regular 20 employees thereof, acting on behalf of the fiduciary estate, 21 testator, trustor, or grantor, or the beneficiaries thereof. 22 d. A certified public accountant issued a certificate issued 23 under section 542.6, a licensed public accountant or licensed 24 public accounting firm issued a license or permit under section 25 542.8, or a certified public accounting firm issued a permit 26 under section 542.7. 27 e. An employee of a certified public accountant, licensed 28 public accountant, licensed public accounting firm, or 29 certified public accounting firm described in paragraph “d” . 30 f. A person employed by a local, state, or federal 31 government agency but only in performance of official duties. 32 Sec. 8. NEW SECTION . 542.32 Supervision of tax preparer. 33 A tax preparer licensed under this chapter may prepare, 34 advise, or assist in the preparation of income tax returns 35 -3- LSB 5185XC (4) 86 gh/rj 3/ 17

S.F. _____ for another only under the supervision of a licensed tax 1 consultant or person described under section 542.31, subsection 2 2, paragraph “b” or “d” , and subject to such conditions and 3 limitations as the board by rule may impose. 4 Sec. 9. NEW SECTION . 542.33 Qualifications for licensure as 5 a tax consultant and tax preparer. 6 1. An applicant for a license as a tax consultant or tax 7 preparer must meet all of the following requirements: 8 a. Be eighteen years of age or older. 9 b. Possess a high school diploma or have passed an 10 equivalency examination. 11 c. Present evidence satisfactory to the board that the 12 applicant has successfully completed at least eighty hours in 13 basic income tax law, theory, and practice at a school training 14 session or educational institution approved by the board. 15 d. Possess a preparer tax identification number issued by 16 the internal revenue service. 17 2. In addition to the requirements of subsection 1, 18 an applicant for licensure as a tax preparer must pass an 19 examination to the satisfaction of the board. The examination 20 shall be constructed in a manner that in the judgment of the 21 board measures the applicant’s knowledge of federal and Iowa 22 income tax law, theory, and practice. 23 3. In addition to the requirements of subsection 1, an 24 applicant for licensure as a tax consultant must do all of the 25 following: 26 a. Present evidence satisfactory to the board of active 27 employment as a tax preparer or employment in this or another 28 state in a capacity that is, in the judgment of the board, 29 equivalent to that of a tax preparer or tax consultant, for not 30 less than a cumulative total of one thousand one hundred hours 31 during at least two of the last five years. 32 (1) The board shall consider certification by a tax 33 consultant or person described under section 542.31, subsection 34 2, paragraph “b” or “d” , that the applicant was employed as 35 -4- LSB 5185XC (4) 86 gh/rj 4/ 17

S.F. _____ a tax preparer under supervision for the period indicated in 1 the certificate to be satisfactory evidence of the applicant’s 2 employment as a tax preparer for the period indicated. 3 (2) If an applicant has worked less than a cumulative 4 total of one thousand one hundred hours in at least two of the 5 last five years, the board may consider the number of hours 6 employed, the number of years employed, the number of tax 7 returns prepared, and whether the work involved contributed 8 directly to the professional competence of the applicant in 9 determining if a tax preparer or tax consultant has met the 10 work experience requirement. 11 b. Pass to the satisfaction of the board an examination 12 that is constructed in a manner that in the judgment of the 13 board measures the applicant’s knowledge of federal and Iowa 14 income tax law, theory, and practice. The examination for 15 licensure as a tax consultant must be of a more complex nature 16 and require higher standards of knowledge of income tax law, 17 theory, and practice than the examination for licensure as a 18 tax preparer. 19 4. If, in the judgment of the board, an applicant has the 20 combined education and experience to qualify for licensure as 21 a tax consultant or tax preparer, but does not meet or cannot 22 present evidence of strict compliance with the requirements 23 of subsection 1, paragraph “c” , or subsection 3, paragraph 24 “a” , the board may allow some of the applicant’s education or 25 experience to substitute one for the other. However, this 26 subsection does not allow a waiver of, or substitution for, any 27 qualifications needed for licensure as a tax consultant or tax 28 preparer other than those described in subsection 1, paragraph 29 “c” , or subsection 3, paragraph “a” . 30 Sec. 10. NEW SECTION . 542.34 Application for licensure. 31 A person seeking licensure as a tax consultant or tax 32 provider shall apply in writing to the board. The board shall 33 approve application forms for licensure. An application shall 34 include or be accompanied by evidence, satisfactory to the 35 -5- LSB 5185XC (4) 86 gh/rj 5/ 17

S.F. _____ board, that the applicant meets the qualifications prescribed 1 in section 542.33. An application shall be accompanied by the 2 examination fee established under this chapter. 3 Sec. 11. NEW SECTION . 542.35 Substantial equivalency, 4 internal revenue service enrollment. 5 1. The board shall issue a license to an applicant as a tax 6 consultant or tax preparer who does all of the following: 7 a. Presents evidence satisfactory to the board that the 8 applicant is licensed as a tax consultant or tax preparer in 9 a state that has requirements for licensure similar to the 10 requirements for licensure in this state. 11 b. Passes to the satisfaction of the board an examination 12 covering federal and Iowa income tax law, theory, and practice, 13 the provisions of this chapter, and the code of professional 14 conduct prescribed by the board. 15 2. Notwithstanding section 542.33, subsections 1 and 3, 16 but as otherwise provided in this chapter, the board shall 17 license as a tax consultant a person who is, on the date of 18 the application for licensure as a tax consultant, enrolled to 19 practice before the internal revenue service pursuant to 31 20 C.F.R. pt. 10 if the person has passed to the satisfaction of 21 the board an examination covering federal and Iowa income tax 22 law, theory, and practice, the provisions of this chapter, and 23 the code of professional conduct prescribed by the board. 24 3. Except as provided in this section, an examination is not 25 required for licensure. 26 4. A person seeking licensure under this section shall apply 27 in writing to the board which application shall be accompanied 28 by the applicable license fees established under this chapter. 29 Sec. 12. NEW SECTION . 542.36 Issuance of licenses. 30 1. The board shall issue a license as a tax consultant or a 31 tax preparer to an applicant who does all of the following: 32 a. Demonstrates to the satisfaction of the board fitness for 33 licensure. 34 b. Pays to the board an initial license fee as established 35 -6- LSB 5185XC (4) 86 gh/rj 6/ 17

S.F. _____ by the board. 1 c. Demonstrates to the board that the applicant has no 2 disciplinary actions pending before the board. 3 2. A tax consultant or tax preparer shall display the 4 license issued to the person in accordance with rules adopted 5 by the board. 6 Sec. 13. NEW SECTION . 542.37 Registration of sole 7 proprietorships, partnerships, corporations, or other legal 8 entities for the preparation of tax returns. 9 1. A sole proprietorship, partnership, corporation, or 10 other legal entity, through individuals who are authorized 11 within this state to render income tax preparation services, 12 may engage in the preparation, advisement, or assistance of 13 income tax returns for another and for valuable consideration 14 and represent that the entity is so engaged if the entity does 15 all of the following: 16 a. Registers annually with the board in the manner 17 prescribed by the board. 18 b. Designates and reports in the manner prescribed by 19 the board the authorized individual or individuals who are 20 responsible for the tax return preparation activities and 21 decisions of the entity. 22 c. Complies with the provisions of this chapter and the 23 rules adopted by the board. 24 2. A sole proprietorship, partnership, corporation, or 25 other legal entity shall not be relieved of responsibility for 26 the conduct or acts of its agents, employees, or officers by 27 reason of compliance with subsection 1, and a tax consultant 28 shall not be relieved of responsibility for professional 29 services performed by reason of employment by or relationship 30 with such sole proprietorship, partnership, corporation, or 31 other legal entity. 32 3. A sole proprietorship, partnership, corporation, or 33 other legal entity shall not engage in tax return preparation 34 activities under subsection 1 if any tax consultant, 35 -7- LSB 5185XC (4) 86 gh/rj 7/ 17

S.F. _____ proprietor, partner, principal, officer, director, manager, or 1 shareholder of the entity is any of the following: 2 a. A person whose license as a tax consultant or tax 3 preparer under this chapter is permanently revoked. 4 b. A person to whom the board has refused to issue or 5 renew a license on the basis of dishonest conduct or conduct 6 involving tax preparation. 7 c. A person whose occupational license, permit, or 8 registration has been revoked by another state regulatory 9 agency or the internal revenue service for dishonest conduct or 10 conduct involving tax preparation. 11 4. For purposes of subsection 3, “shareholder” means any of 12 the following: 13 a. A person who owns more than ten percent in value of the 14 outstanding stock of the corporation if the corporation is 15 publicly traded, or traded on an established securities market. 16 b. A person who owns any value in outstanding stock of the 17 corporation if the corporation is not publicly traded, or not 18 traded on an established securities market. 19 Sec. 14. NEW SECTION . 542.38 Renewal of license, 20 restoration of lapsed license. 21 1. A tax consultant or tax preparer seeking license renewal 22 shall apply for annual license renewal to the board and pay the 23 fee for license renewal on or before the date prescribed by 24 the board. The application shall be accompanied by evidence 25 satisfactory to the board that the person applying for license 26 renewal has completed the continuing education requirements 27 established under this chapter. 28 2. The board shall provide notice to the tax consultant or 29 tax preparer that the annual renewal application and fee are 30 due at least thirty days before the established annual renewal 31 date. 32 3. A license that is not renewed within fifteen days after 33 the established annual renewal date shall lapse. 34 4. The board shall restore a lapsed license upon payment to 35 -8- LSB 5185XC (4) 86 gh/rj 8/ 17

S.F. _____ the board of all unpaid renewal fees and a fee for restoration 1 of a lapsed license and upon proof of compliance with any 2 applicable continuing education requirements. 3 Sec. 15. NEW SECTION . 542.39 Continuing education 4 requirement. 5 1. Except as provided in subsection 2, a person licensed 6 as a tax consultant or tax preparer shall submit evidence 7 satisfactory to the board that the person has completed at 8 least thirty hours of board-approved instruction or seminar 9 in subjects related to income tax preparation for each year 10 that the person is licensed. The tax consultant or tax 11 preparer shall submit evidence satisfactory to the board of 12 compliance with this subsection upon submission of the annual 13 license renewal application. If the board does not receive 14 satisfactory evidence that a tax consultant or tax preparer has 15 completed the continuing education requirement, the board shall 16 not renew the applicant’s license. 17 2. The board shall have the discretion to exempt a tax 18 consultant or tax preparer from the continuing education 19 requirement if the applicant provides evidence satisfactory 20 to the board of an inability to comply because of unusual or 21 extenuating circumstances. 22 Sec. 16. NEW SECTION . 542.40 Inactive status. 23 1. If a tax consultant or tax preparer ceases to engage in 24 the preparation or in advising or assisting in the preparation 25 of income tax returns, the tax consultant or tax preparer may 26 apply to the board to be placed in inactive status. A license 27 in inactive status may be renewed each year upon payment 28 of the license fee established under this chapter. Proof 29 of compliance with the continuing education requirement as 30 provided in section 542.39 need not be presented to the board 31 for the renewal of a license in inactive status. 32 2. A license in inactive status may be reactivated upon 33 payment of a reactivation fee, as established under this 34 chapter, and upon proof of compliance with such continuing 35 -9- LSB 5185XC (4) 86 gh/rj 9/ 17

S.F. _____ education requirements as may be adopted by the board by rule. 1 3. The board may revoke or suspend a license in inactive 2 status if conditions exist under which the board would have 3 been authorized to revoke or suspend the license if it were 4 active. 5 4. A person whose license is inactive shall not act as a tax 6 consultant or tax preparer. 7 Sec. 17. NEW SECTION . 542.41 Fees. 8 The board, by rule, may establish and charge fees for the 9 following: 10 1. The application for examination for a tax consultant 11 license. 12 2. The application for examination for a tax preparer 13 license. 14 3. The issuance or renewal of a tax consultant license. 15 4. The issuance or renewal of a tax preparer license. 16 5. The issuance or renewal of an inactive tax consultant 17 license. 18 6. The issuance or renewal of an inactive tax preparer 19 license. 20 7. The reactivation of an inactive tax consultant or tax 21 preparer license. 22 8. The restoration of a lapsed license. 23 9. The issuance or replacement of a duplicate license. 24 10. The registration or registration renewal for a sole 25 proprietorship, partnership, corporation, or other legal 26 entity. 27 11. The issuance or renewal of a tax consultant or tax 28 preparer license combined with the registration for a sole 29 proprietorship, partnership, corporation, or other legal 30 entity. Eligibility for a combined license shall be determined 31 by rules adopted by the board. 32 Sec. 18. NEW SECTION . 542.42 Tax consultant records. 33 1. Except as provided in this section, a person licensed as 34 a tax consultant shall keep records of all income tax returns 35 -10- LSB 5185XC (4) 86 gh/rj 10/ 17

S.F. _____ prepared by the person, or in the preparation of which advice 1 or assistance has been provided. The records of the returns 2 shall be kept for a period of not less than four years after the 3 date of the preparation, advice, or assistance. 4 2. If a tax consultant is employed by another tax 5 consultant, the records shall be kept by the employing tax 6 consultant. 7 3. If a tax consultant who has been designated as 8 responsible for the tax return preparation activities and 9 decisions of a partnership, corporation, or other legal entity 10 ceases to be connected with the entity, the records shall be 11 retained by the entity. 12 Sec. 19. NEW SECTION . 542.43 Appointment of secretary of 13 state as agent. 14 Application for a license under section 542.34 by a person 15 or entity not a resident of this state constitutes appointment 16 of the secretary of state as the applicant’s agent upon whom 17 process may be served in any action or proceeding against the 18 applicant arising out of a transaction or operation connected 19 with or incidental to services performed by the applicant while 20 a licensee within this state. 21 Sec. 20. NEW SECTION . 542.44 Continuing authority of board. 22 The lapsing, suspension, or revocation of a license by 23 operation of law, order of the board, decision of a court of 24 law, or voluntary surrender by a licensee shall not deprive 25 the board of jurisdiction to proceed with any investigation of 26 or any action or disciplinary proceeding against the licensee, 27 or to revise or render null and void an order suspending or 28 revoking the license. 29 Sec. 21. NEW SECTION . 542.45 Prohibited acts. 30 Except as otherwise provided in this chapter, a person shall 31 not do any of the following: 32 1. Prepare, advise, or assist in the preparation of income 33 tax returns for another and for valuable consideration or 34 represent that the person is so engaged if the person is not 35 -11- LSB 5185XC (4) 86 gh/rj 11/ 17

S.F. _____ licensed as a tax consultant or tax preparer. 1 2. Assume or use the title or designation of “tax 2 consultant” or “tax preparer” if the person is not licensed as 3 a tax consultant or tax preparer. 4 3. Obtain or attempt to obtain a license as a tax consultant 5 or a tax preparer by any fraudulent representation. 6 4. Represent that the person is licensed as a tax consultant 7 or tax preparer if the person is not so licensed. 8 5. Present or attempt to use the license of another person. 9 6. Attempt to use a suspended, lapsed, or revoked license. 10 7. Falsely impersonate a person licensed as a tax consultant 11 or tax preparer. 12 8. Engage in dishonesty, fraud, or deception relating to the 13 preparation of income tax returns. 14 Sec. 22. NEW SECTION . 542.46 Grounds for disciplinary 15 action. 16 After notice and hearing, the board may revoke, suspend for 17 a period of time not to exceed two years, or refuse to renew a 18 license; reprimand, censure, or limit the scope of practice of 19 any licensee; impose an administrative penalty not to exceed 20 one thousand dollars per violation against an individual 21 licensee or ten thousand dollars per violation against a 22 registered legal entity; require remedial actions; or place a 23 licensee on probation; all with or without terms, conditions, 24 and in combinations of remedies, for any one or more of the 25 following reasons: 26 1. Violation of section 542.31, subsection 1, or section 27 542.32 or 542.45. 28 2. Failure to keep records pursuant to section 542.42. 29 3. Negligence or incompetence while working in the capacity 30 as a tax consultant or tax preparer in another state or the 31 federal government. 32 4. Conduct resulting in a conviction of a felony under the 33 laws of any state or of the United States. 34 5. Conviction of any crime, an essential element of which is 35 -12- LSB 5185XC (4) 86 gh/rj 12/ 17

S.F. _____ dishonesty, fraud, or deception, under the laws of any state or 1 the United States. 2 6. Conviction of any crime related to the tax laws of any 3 state or the United States. 4 7. Failure to comply with the continuing education 5 requirement under section 542.39, unless such requirements have 6 been waived by the board. 7 8. Failure to pay any administrative penalty incurred 8 within the time determined by the board. 9 9. Cancellation, revocation, suspension, voluntary 10 surrender, or refusal to renew the authority to practice as 11 a certified public accountant, licensed public accountant, 12 accounting practitioner, licensed tax consultant, or licensed 13 tax preparer, by any other state or foreign authority for any 14 cause other than the failure to pay appropriate fees. 15 EXPLANATION 16 The inclusion of this explanation does not constitute agreement with 17 the explanation’s substance by the members of the general assembly. 18 PRACTICE ACT. This bill requires the Iowa accountancy 19 examining board to license all persons who wish to practice as 20 tax consultants or tax preparers. 21 DEFINITIONS. The bill defines a “tax consultant” to mean 22 a person who is licensed to prepare, advise, or assist in 23 the preparation of income tax returns for another and for 24 valuable consideration. The bill defines a “tax preparer” as 25 a person who is licensed to prepare, advise, or assist in the 26 preparation of income tax returns for another and for valuable 27 consideration under the supervision of a tax consultant or 28 other authorized person. 29 AMENDMENTS. The bill amends several paragraphs in Code 30 section 542.4(9), as well as adds a new paragraph, to provide 31 the Iowa accountancy examining board with authority to regulate 32 the tax consultant and tax preparer professions. The bill 33 also amends Code sections 542.14 and 542.15 to subject tax 34 consultant and tax preparer licensees to the same penalties 35 -13- LSB 5185XC (4) 86 gh/rj 13/ 17

S.F. _____ as the other public accounting professions regulated in Code 1 chapter 542. 2 PRACTICE REQUIREMENT AND EXEMPTIONS. The bill prohibits 3 a person from engaging in the practice of income tax return 4 preparation for another and for valuable consideration 5 unless the person is licensed as a tax consultant or tax 6 preparer. The bill exempts the following persons from the 7 bill’s licensing requirements: employees who prepare income 8 tax returns only for the business of the employer, attorneys, 9 fiduciaries acting on behalf of an estate, other individuals 10 or firms licensed under Code chapter 542, employees of other 11 individuals or firms licensed under Code chapter 542, and 12 government employees. 13 SUPERVISION OF TAX PREPARERS. The bill requires tax 14 preparers to work under the supervision of licensed tax 15 consultants or other authorized individuals. 16 QUALIFICATIONS FOR LICENSURE. The bill requires an 17 applicant for a tax consultant or tax preparer license to be at 18 least 18 years of age, possess a high school diploma, complete 19 at least 80 hours of relevant training or education, possess an 20 internal revenue service preparer tax identification number, 21 and pass an examination. An applicant for a tax consultant 22 license must also demonstrate employment in a relevant 23 profession for no less than 1,100 total hours during at least 24 two of the last five years. The board may consider other 25 relevant factors if an applicant has less than 1,100 total 26 hours. The board may also substitute an applicant’s education 27 and work experience if the applicant does not meet these exact 28 requirements. 29 APPLICATION. The bill requires an applicant for licensure 30 to apply in writing to the board. The applicant must include 31 evidence that the applicant meets the qualifications for 32 licensure, as well as the examination fee. 33 SUBSTANTIAL EQUIVALENCY. The bill requires the board to 34 issue a license to an applicant who is licensed as a tax 35 -14- LSB 5185XC (4) 86 gh/rj 14/ 17

S.F. _____ consultant or tax preparer in another state with similar 1 licensure qualifications and passes an examination. The bill 2 also requires the board to issue a license to an applicant who 3 is enrolled to practice before the internal revenue service 4 pursuant to 31 C.F.R. pt. 10 and passes an examination. 5 ISSUANCE OF LICENSES. The bill requires the board to issue a 6 license to an applicant who demonstrates fitness for licensure, 7 pays the initial license fee, and has no pending disciplinary 8 actions before the board. 9 REGISTRATION OF LEGAL ENTITIES PREPARING TAX RETURNS. The 10 bill requires a sole proprietorship, partnership, corporation, 11 or other legal entity engaged in the practice of income tax 12 return preparation to register annually with the board. Such 13 a legal entity must also report the individuals responsible 14 for the tax preparation activities to the board. The legal 15 entity is prohibited from engaging in income tax return 16 preparation activities if any employee, officer, or shareholder 17 of the legal entity has had their license as a tax consultant 18 or tax preparer revoked, or has been refused a license or 19 renewal because of dishonest conduct or conduct involving tax 20 preparation in this state, another state, or by the internal 21 revenue service. 22 RENEWAL AND RESTORATION OF LAPSED LICENSE. The bill 23 requires a licensee to apply for annual license renewal, with 24 proof of compliance with the continuing education requirement. 25 The board shall provide notice of the renewal requirement to 26 the licensee at least 30 days in advance. A license lapses if 27 it is not renewed within 15 days of the annual renewal date. 28 The board shall restore a lapsed license after payment of all 29 fees and proof of compliance with the continuing education 30 requirement. 31 CONTINUING EDUCATION REQUIREMENT. The bill requires a 32 licensee to complete 30 hours of continuing education annually 33 but provides for waiver of the requirement because of unusual 34 or extenuating circumstances. 35 -15- LSB 5185XC (4) 86 gh/rj 15/ 17

S.F. _____ LICENSES IN INACTIVE STATUS. The bill permits a license to 1 apply to be placed in inactive status if the licensee ceases to 2 engage in the profession, which may be reactivated upon payment 3 of a fee and proof of compliance with the continuing education 4 requirement. The board may revoke or suspend a license in 5 inactive status. 6 FEES. The bill authorizes the board to establish fees for 7 examinations, the issuance, renewal, reactivation, restoration, 8 and replacement of a license, the registration of legal 9 entities, and the issuance or renewal of a license combined 10 with the registration of a legal entity. 11 RECORDKEEPING. The bill requires tax consultants to keep a 12 record of each income tax return prepared or worked on by the 13 licensee for at least four years after the preparation. 14 SECRETARY OF STATE AS AGENT. The bill requires the secretary 15 of state to be appointed as the agent for a nonresident 16 license applicant for any action arising out of the applicant’s 17 services while licensed in the state. 18 CONTINUING AUTHORITY OF BOARD. The bill provides the board 19 with continuing authority to regulate a licensee whose license 20 has lapsed or is suspended, revoked, or surrendered. 21 PROHIBITIONS. The bill prohibits a person from doing the 22 following: engaging in the preparation of income tax returns 23 without a license, using the title of “tax consultant” or “tax 24 preparer” without a license, obtaining or attempting to obtain 25 a license by any fraudulent misrepresentation, representing 26 that the person is licensed if the person is not, using or 27 attempting to use the license of another person, attempting 28 to use a suspended, lapsed, or revoked license, falsely 29 impersonating a licensed person, and engaging in dishonesty, 30 fraud, or deception in the preparation of income tax returns. 31 A violation is a serious misdemeanor. A serious misdemeanor is 32 punishable by confinement for no more than one year and a fine 33 of at least $315 but not more than $1,875. 34 GROUNDS FOR DISCIPLINARY ACTION. The bill authorizes the 35 -16- LSB 5185XC (4) 86 gh/rj 16/ 17

S.F. _____ board to take disciplinary action for the following reasons: 1 violating Code section 542.32, 542.39, 542.42, or 542.45; 2 negligence or incompetence as a tax consultant or tax preparer 3 in another state; being convicted of a felony, a crime with the 4 element of dishonesty, fraud, or deception, or a crime related 5 to tax law; failure to pay an administrative penalty; or losing 6 a license issued by another state or foreign authority for 7 any reason besides failing to pay fees. The board may take 8 the following disciplinary actions after notice and hearing: 9 revoke, suspend for up to two years, or refuse to renew a 10 license, reprimand, censure, place on probation, or limit the 11 scope of practice of a licensee, take remedial action, and 12 impose an administrative penalty of up to $1,000 per violation 13 against an individual licensee or up to $10,000 per violation 14 against a registered legal entity. 15 -17- LSB 5185XC (4) 86 gh/rj 17/ 17