Tennessee House Bill HB2905

Tennessee 2023-2024 Regular Session

• Introduced: 1/31/24
• Refer: 2/5/24
• Refer: 2/20/24
• Refer: 2/27/24
• Chaptered: 4/8/24
• Passed: 4/8/24

Caption

AN ACT to amend Tennessee Code Annotated, Title 56, Chapter 7, Part 1, relative to an exception from the definition of a contract of insurance for tax preparation service company warranty contracts.

Impact

The enactment of HB 2905 will impact tax preparation services by establishing requirements that they must adhere to in order to offer warranty contracts. These requirements include obtaining liability insurance or securing a bond that ensures they can cover potential additional tax liabilities, penalties, or interest incurred by taxpayers due to errors in tax preparation. The bill mandates minimum coverage amounts between $100,000 and $500,000, thus providing a safety net for consumers while ensuring that tax preparers maintain accountability for their services.

Summary

House Bill 2905 is focused on the regulatory framework surrounding tax preparation service company warranty contracts in Tennessee. The bill amends Tennessee Code Annotated, Title 56, Chapter 7, Part 1, to provide a specific exception from the definition of a contract of insurance for certain warranty contracts offered by tax preparation service companies. This legislation aims to clarify the legal status of these contracts by denying them the categorization of insurance contracts, thereby influencing how they are treated under state law.

Sentiment

The sentiment around HB 2905 appears to be generally supportive among tax preparation service providers and legislators advocating for consumer protection. Proponents argue that the bill will enhance accountability and consumer confidence in tax services, while also addressing potential gaps in consumer rights when errors occur. However, there may be some concerns regarding the financial implications for smaller tax preparation firms, as the cost of complying with the insurance or bonding requirements could pose a burden on them.

Contention

Notably, points of contention surrounding the bill could arise from differing opinions on the adequacy of required coverage amounts and the potential financial strain on smaller tax preparation businesses. As with any regulatory amendment, there may be discussions about ensuring a balance between protecting consumers and maintaining a viable business environment for tax service providers. Additionally, discussions could focus on whether the legislation sufficiently addresses consumer needs without imposing excessive regulatory burdens.