Regulation of Tax Preparers

The commissioner of Revenue may impose an administrative penalty of up to $1,000 per violation of the standards of conduct and may terminate a tax preparer’s authority to electronically submit returns.

The commissioner of Revenue may issue a cease and desist order to a tax preparer that violates Minnesota Statute 270C.445, subdivision 3 or 5, or Minnesota Statute 270C.4451. If the tax preparer violates the order, the commissioner may issue a penalty up to $5,000 per violation of the order.

See Minnesota Statute 270C.445, subdivision 6.

Preparers must electronically file all Minnesota individual income, corporation franchise, S corporation, partnership, and fiduciary tax returns if they expect to prepare more than 10 Minnesota tax returns for this year. 

Preparers must self-assess a $5 paper-filing fee per return filed by paper that could have been e-filed. To submit a payment, use the payment voucher system or use e-Services Payment System.

For details, see, Schedule PFF, $5 Paper Filing Fee and Individual Income Tax Fact Sheet 17, Preparer’s Paper Filing Fee.

Returns are exempt from this fee if either:

• The IRS or Revenue require you to file the return by paper
• Your client opts out of e-filing on the appropriate checkbox of the Minnesota return

See Minnesota Statute 289A.08, subdivision 16.

We apply a $500 preparer penalty to preparers who act with reckless disregard of the law when preparing returns or claims for refund, or willfully attempt in any manner to understate the tax liability for a client.

See Minnesota Statute 289A.60, subdivision 13.

Tax preparers who prepare Minnesota individual income tax returns must provide their federal tax preparer identification number (PTIN) or employee identification number (EIN) on these Minnesota returns. If they do not, we will assess a $50 penalty for each return without a federal ID.

• Minnesota Individual Income Tax return
• Claims for refund of an overpayment of tax
• Property tax refund returns
• Corporation franchise tax returns
• Fiduciary income tax returns
• Credit for Military Service in a Combat Zone returns

If a preparer is required to have a PTIN but does not have one, we may assess a $500 penalty for each failure to include a PTIN on returns filed by the preparer.

See Minnesota Statute 289A.60, subdivision 28.

The commissioner of Revenue must refer complaints received about tax preparers who are accountants or attorneys to the State Board of Accountancy and the Lawyers Board of Professional Responsibility.  

These professional agencies must refer any complaints received for preparers who are not under their jurisdiction to the commissioner of Revenue.

Both Revenue and the professional agencies must keep data private until a penalty is imposed either as provided in statute or by the Lawyers Board of Professional Responsibility.

See Minnesota Statute 270C.445, subdivision 6c.

Paid tax preparers must follow these standards of conduct or be penalized.

These standards do not apply to attorneys, certified public accountants, or enrolled agents. They are subject to separate standards of conduct. (See Minnesota Statute 289A.60, subdivision 13).

Tax preparers must:

• Act in the best interest of the client
• Promptly complete a client’s tax return
• Sign a client’s tax return when transaction is complete
• Give a client a copy of any document requiring the client’s signature
• Retain copies of individual income tax returns for at least four years
• Maintain a confidential relationship with clients and former clients
• Safeguard a client’s nonpublic personal information
• Safeguard and account for any money handled for the client
• Disclose all information that affect the client’s rights and interests

Tax preparers must not:

• Get a client’s signature on an incomplete form
• Be dishonest in any aspect of tax preparation
• Require a client to agree to a loan arrangement to complete a tax return
• Charge or accept a fee based on a percentage of an anticipated refund for tax preparation services
• Falsely claim credits or deductions on a client’s tax return
• Violate any provision of Minnesota Statute 332.37
• Withhold a document provided by the client for use in preparing the client’s tax return
• Create an account to receive a client’s refund without the client’s name on the account
• Include any of these in any document:
  • A hold harmless clause
  • A confession of judgment or a power of attorney to confess judgment against the client or appear as the client in any judicial proceeding
  • A waiver of the right to a jury trial in any action brought by or against a debtor
  • An assignment of or an order for payment of wages or other compensation for services
  • A provision stating the client agrees not to assert any claim or defense otherwise available
  • A waiver of any provision of this section or a release of any obligation required to be performed on the part of the tax preparer
  • A waiver of the right to injunctive, declaratory, or other equitable relief or relief on a class basis
  • If making, providing, or facilitating a refund anticipation loan, fail to provide all disclosures required by the federal Truth in Lending Act, United States Code, title 15, in a form that may be retained by the client.

See Minnesota Statute 270C.445.

Tax preparers must provide an itemized bill for services charged or face a penalty up to $1,000. The bill must list each of these charges separately:

• Return preparation
• Providing or facilitating a refund anticipation loan
• Each fee associated with a refund anticipation check

See Minnesota Statute 270C.445, subdivision 5.

When preparing corporation franchise tax, individual income tax, or property tax refund returns, tax preparers must give written notice to their clients about the option to contribute to the Nongame Wildlife Fund. If they do not, we will assess a penalty up to $1,000.   

The notice must be included with information used in preparing the client’s return and must include a line for displaying contributions.

See Minnesota Statute 270C.445, subdivision 5a.

Under Minnesota law, we must publish a tax preparer’s name if they are:

• Convicted under Minnesota Statute 289A.63
• Convicted for identity theft for a return filed with commissioner, the IRS, or another state
• Assessed a penalty in excess of $1,000 for either Minnesota Statute 289A.60, subdivision 13, and Minnesota Statute 270C.445, subdivision 6(a)
• Subject to a cease and desist order that has become final
• Assessed a penalty for violating a cease and desist order

We send a written notice by certified mail to the tax preparer 30 days before the publication of their name and business addresses.

See Minnesota Statute 270C.446.

Tax preparers must provide a written agreement to make, provide, or facilitate a refund anticipation loan or check. The agreement may not include provisions for:

• Check cashing fees
• Credit insurance
• Attorney fees
• The collection of any debt other than:
  • The repayment of a refund anticipation loan
  • Tax preparation fees associated with the loan or check

If the agreement includes a mandatory arbitration clause, a separate written and verbal notice must be included stating that:

• Arbitration is the only means of dispute resolution
• The client has the right to opt out of the arbitration clause within 30 days of entering into an agreement
• The client is not bound to arbitration if the claim or dispute is a violation of the statute’s requirements for refund anticipation loans for checks, or the client sued the preparer for violating the standards of conduct for paid return preparers.

See Minnesota Statute 270C.4451, subdivision 1.

The tax preparer must make specific written disclosures for a refund anticipation loan or check.

The tax preparer must provide all disclosures to a client:

• Before or at the same time the preparer offers to make the loan or check
• In a written notice on a single sheet of paper, separate from any other document or writing
• In the client's primary language, if the tax preparer advertises in that language

The written notice must:

• Include the specific language required by statute
• Be in a minimum of 14-point type for all small and capital letters
• Be at least double spaced between each required statement
• Be signed and dated by the tax preparer and client

See Minnesota Statute 270C.4451, subdivision 2.

A refund anticipation loan disclosure must have:

• “NOTICE” centered at the top of the single sheet of paper in bold 28-point type with capital letters
• The following statements verbatim:
  • "This is a loan. This is not your refund. The annual percentage rate (APR), based on the estimated payment period, is (fill in the estimated APR)."
  • "Your refund will be used to repay the loan. As a result, the amount of your refund will be reduced by (fill in appropriate dollar amount) for fees, interest, and other charges."
  • "You have the right to cancel this transaction by returning the loan check or the amount of the loan in cash within one business day after you get the loan."
  • "You can get your refund in about two weeks if you file your return electronically and have the Internal Revenue Service send your refund to your own bank account."
• The following statement verbatim, if the client is subject to additional interest when a refund is delayed:
  • "If you choose to take this loan and your refund is delayed, you may have to pay." 

See Minnesota Statute 270C.4451, subdivision 3.

A refund anticipation check disclosure must have:

• “NOTICE” centered at the top of the single sheet of paper in bold 28-point type with capital letters
• The following statements verbatim:
  • "You do not have to purchase a refund anticipation check (RAC) to get your tax refund."
  • "Generally the IRS can direct deposit your income tax refund to your personal bank account within 8 to 15 days after the IRS accepts your tax return for processing."
  • "If you choose to purchase a RAC, your tax return funds will generally be made available to you within 8 to 15 days."
  • "A RAC is not a loan."
  • "The cost of the RAC is (fill in dollar amount)."
  • "You can either pay for your RAC now or have it withheld from your refund."
  • "The cost of your tax return is not any more or any less if you purchase a RAC."

If the tax preparer uses a different product name but is offering a refund anticipation check, they must replace “RAC” with the product name in the statements above.

See Minnesota Statute 270C.4451, subdivision 4.

After the loan is granted, the client may cancel the refund anticipation loan up to the end of the next business day by doing both of these:

• Provide a written cancellation notice to the tax preparer

• Return the original check issued for the loan or repay the amount of the loan to the tax preparer

If the financial institution charged a fee to open the account, the tax preparer may only charge a fee when a client cancels a refund anticipation loan. The cancelation fee must not exceed the cost of opening the account.

See Minnesota Statute 270C.4451, subdivision 5.