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S2810AAbuse & Fraud

Taxation - Tax Preparers Act of 2013

This bill bans hidden "ghost" tax preparers and increases fines for tax preparers who commit fraud or break regulations.

Introduced66 Yea3 Nay6 Not voting
Population
Affected
35
Email Legislator
Introduced Mar 4, 2026Committee Senate Finance

Plain-English Summary

This bill updates the rules for paid tax preparers in Rhode Island to protect consumers from fraud. It specifically targets "ghost preparers," which are people who get paid to prepare taxes but do not sign the return or provide their official preparer identification number. The bill makes it illegal to act as a ghost preparer. It also increases the penalties for tax preparers who break the rules, commit fraud, or continue to prepare taxes after their privileges have been suspended or revoked, with fines reaching up to $10,000 per violation.

For younger readers

When adults pay someone to help them do their taxes, that helper is supposed to sign their name and put a special ID number on the paperwork. Sometimes people take the money but don't sign their name, which makes them a "ghost helper." This bill makes it against the rules to be a ghost helper in Rhode Island. It also says that if a tax helper breaks the rules, tricks people, or keeps doing taxes when they were told to stop, they will have to pay a lot of money as a punishment.

Who & Where It Applies

Impacted groups
Tax return preparersGhost preparersTaxpayers seeking preparation assistanceCommercial tax return preparation businessesDivision of Taxation personnel
Impacted communities
All

Constitutional & Fiscal Check

None Likely. The bill regulates commercial activity (paid tax preparation), which is a standard exercise of state police power. The inclusion of an appeals process through the district court satisfies constitutional due process requirements.

Estimated cost
Tax return preparers: up to $1,000 per return for fraud/misleading taxpayers, up to $5,000 per violation if suspended, up to $10,000 per violation if revoked. General taxpayers: None.
Estimated revenue
Amount unknown

Bill Analysis

Both viewpoints
For Progressives
  • Protects vulnerable and low-income taxpayers from predatory "ghost preparers" who often charge hidden fees or file fraudulent returns without accountability.
  • Strengthens consumer protection by imposing significant financial penalties on tax preparers who commit fraud, deliberately mislead taxpayers, or jeopardize their clients' earned-income and property tax relief credits.
  • Enhances the state's ability to regulate the tax preparation industry by increasing fines for bad actors who continue to operate after their privileges have been suspended or revoked.
  • The steep fines of up to $10,000 may disproportionately impact small, informal, or community-based tax preparers operating in low-income neighborhoods.
  • Expanding the state's punitive authority and publishing a public list of suspended preparers relies on public shaming and lacks restorative justice options.
  • Does not allocate funding for additional public services, such as free tax assistance or educational resources, to help low-income taxpayers avoid predatory preparers in the first place.
For Conservatives
  • Promotes the rule of law and protects state revenue by cracking down on fraudulent tax preparers who attempt to evade tax obligations or wrongfully obtain tax credits.
  • Ensures a level playing field for legitimate, law-abiding tax preparation businesses by penalizing "ghost preparers" who operate outside the regulatory framework.
  • Implements strict financial penalties and accountability measures to deter fraud and punish bad actors who purposefully circumvent state tax laws.
  • Increases government regulation and oversight over the tax preparation industry, potentially creating more bureaucratic hurdles for independent professionals.
  • Imposes excessive financial penalties (up to $10,000 per violation) that could bankrupt small businesses or independent contractors for regulatory infractions.
  • Grants the tax administrator broad authority to suspend or revoke business privileges and publish a public list of offenders, which could be seen as government overreach.

Votes

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Full Bill Text

2 versions
Changes to existing Rhode Island law · 32 additions · 5 deletions

It is enacted by the General Assembly as follows:

SECTION 1. The title of Chapter 44-68 of the General Laws entitled "Tax Preparers Act of 2013" is hereby amended to read as follows:

SECTION 2. Sections 44-68-2, 44-68-3 and 44-68-4 of the General Laws in Chapter 44- 68 entitled "Tax Preparers Act of 2013" are hereby amended to read as follows: 44-68-2. Definitions. As used in this chapter, the following words shall, unless the context clearly requires otherwise, have the following meanings:

(a) “Ghost preparer” means a tax return preparer who does not self-identify on returns they prepare or does not comply with the PTIN requirements in 26 U.S.C. § 6109 and Treasury Regulation 26 C.F.R. § 1.6109-2, and is compensated for or otherwise benefits from the preparation of returns. (a)(b) “Tax return preparer” means an individual who prepares a substantial portion of any return for compensation. Tax return preparers include ghost preparers and individuals required to register with the Internal Revenue Service as a tax return preparer and who have a Preparer Tax Identification Number (PTIN). For the purpose of this chapter the following individuals shall not be considered tax return preparers:

(1) Volunteer tax return preparers; or

(2) Employees of a tax return preparer and employees of a commercial tax return preparation business who provide only clerical, administration or other similar services. (b)(c) “Preparer Tax Identification Number” or “PTIN” means the number issued by the Internal Revenue Service (IRS) to paid preparers to use that must be included on all the returns they prepare. (c)(d) “Return” shall mean any tax report, return, claim for refund or attachment to any report, return and/or claim for return refund filed with the tax administrator pursuant to the tax laws of this state. 44-68-3. Duties and responsibilities.

(a) A tax return preparer who prepares any return that is submitted to the tax administrator must comply with all state laws and all applicable regulations promulgated by the tax administrator.

(b) A tax return preparer must sign and include his/her preparer tax identification number on all returns prepared and filed with the division of taxation.

(c) A tax return preparer shall not be a ghost preparer or engage in any activity with the intent to facilitate the use of a ghost preparer. 44-68-4. Civil penalties.

(a) Failure to be diligent in determining eligibility for or amount of earned-income credit. Upon a determination by the tax administrator that a tax return preparer prepared a return(s) and failed to comply with due diligence requirements imposed by regulations issued by the tax administrator with respect to determining eligibility for, or the amount of, the credit allowable by § 44-30-2.6(c)(2)(N), the tax return preparer shall pay a penalty of five hundred dollars ($500) for each such return and/or claim.

(b) Failure to be diligent in determining eligibility for property tax relief credit. Upon a determination by the tax administrator that a tax return preparer prepared a return(s) and failed to comply with due diligence requirements imposed by regulations issued by the tax administrator with respect to determining eligibility for, or the amount of, the property tax relief credit allowable by § 44-33-1 et seq., the tax return preparer shall pay a penalty of five hundred dollars ($500) for each such return.

(c) Tax return preparer civil penalties.

(1) Upon a determination by the tax administrator that a tax return preparer willfully prepared, assisted in preparing, or caused the preparation of a return(s) filed with the division of taxation with intent to wrongfully obtain a property tax relief credit or with the intent to evade or reduce a tax obligation, the tax return preparer shall be liable for a penalty of one thousand dollars ($1,000), or five hundred ($500) for each return so filed during any calendar year, whichever is greater.

(2) Upon a determination by the tax administrator that a tax return preparer willfully misled or committed fraud against a taxpayer, or purposefully circumvented tax laws administered by the tax administrator, or violated any provision of § 44-68-3, the tax return preparer shall be liable for a penalty of not more than one thousand dollars ($1,000) for each return so filed during any calendar year.

(d) The tax administrator may suspend or revoke the privilege of a tax return preparer to prepare and/or file returns with the division of taxation upon a determination that the tax return preparer has failed to comply with or violated any provision of this section, any regulations issued by the tax administrator, or with any provision of any other laws relative to the preparation of tax returns. Any tax return preparer receiving a notice of intent to suspend or revoke the privilege to file tax returns with the division of taxation may request a hearing on the notice of intent to suspend or revoke; provided that said request for a hearing must be made within thirty (30) days of such notice to suspend or revoke. If, after hearing, the tax return preparer is aggrieved by a decision of the tax administrator (or his or her designated hearing officer), the tax return preparer may, within thirty (30) days after notice of the decision is sent to the tax return preparer by certified or registered mail, directed to their last known address, petition the sixth division of the district court pursuant to chapter 8 of title 8, setting forth the reasons why the decision is alleged to be erroneous and praying for relief therefrom. The tax administrator may, on a periodic basis, prepare and publish a list of tax return preparers whose privileges as a tax return preparer have been suspended or revoked.

(e) Upon a determination by the tax administrator that a tax return preparer has committed a violation of this section subsequent to a suspension or revocation of that tax return preparer’s privilege to prepare and/or file returns with the division of taxation, the tax return preparer shall be liable for a penalty of not more than five thousand dollars ($5,000) if suspended, or ten thousand dollars ($10,000) if revoked, per violation.

SECTION 3. This act shall take effect upon passage.