Assigned to FIN FOR COMMITTEE

ARIZONA STATE SENATE

Phoenix, Arizona

FACT SHEET FOR S.B. 1279

confidential tax information; quality review

Purpose

Allows the State Board of Accountancy (Board) to access confidential tax information when conducting reviews or investigation of accountants.

Background

One of the responsibilities of the Board is to regulate certified public accountants and public accountants. Under current statute, the Board has the authority to initiate proceedings and investigations of accountants (A.R.S. § 32-743). The Board also conducts quality reviews (A.R.S. § 32-749). Quality reviews are performed in order to ensure accountants, tax preparers and auditors are providing quality service to their clients. Most quality reviews are conducted after the Board has received a complaint in relation to an accountant or tax preparer.

S.B. 1279 exempts authorized agents of the Board who are conducting investigations or quality reviews from tax preparer's confidentiality regulations of tax returns.

According to the Department of Revenue, there is no estimated fiscal impact to the state general fund associated with this legislation

Provisions

1. Allows agents of the Board to view confidential taxpayer documents when conducting investigations without the consent of the taxpayer.

2. Allows agents of the Board to review confidential taxpayer records when conducting quality reviews without the consent of the taxpayer and specifies that only authorized reviewers may conduct quality reviews

3. Specifies that disclosed tax return information can only be used for quality reviews.

4. Specifies that tax return information will only be made available and reviewed by authorized quality reviewers.

5. Requires a tax preparer to maintain records of the information being reviewed and identity of the authorized quality reviewer.

6. States that all documents containing the taxpayers name or identification number be returned to the tax preparer after the quality review is completed.

7. Adds a definition for “authorized reviewer” to mean any attorney, certified public accountant, enrolled agent or enrolled actuary certified by the Internal Revenue Service or, assisting administrative and support staff.

8. Adds a definition for “quality review” to mean an evaluation of the quality and accuracy of a tax return preparer's accounting or auditing services.

9. Makes technical and conforming changes

10. Provides for a general effective date.

Prepared by Senate Staff

February 6, 2002