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California Compliance Information for Tax Preparers

As a user of CrossLink, we are providing this information to you so that you may ensure you are complying with your state licensing and bonding consumer protection laws. If you offer RALs to your clients, you may be required to be licensed and bonded by the state of California as a Credit Services Organization. This is in addition to registration as a California Registered Tax Preparer and other registration requirements.

Who must be Licensed and Bonded?
A tax preparer who sells, provides, performs, assists, or advises a client on the acquisition of a loan in the state of California must be licensed and bonded to do so.

What are the Requirements to become Licensed and Bonded?
First, you must secure a $100,000 bond and file a copy of the bond with the Secretary of State. After the bond has been filed, you must apply for a license and submit a $100 fee to the Department of Justice. Along with the application, you must submit a sample of the client contract you use, which must always be in writing, along with any other documents you give to your client concerning the services provided.

What Additional Requirements Apply?
Prior to entering into a contract with a client, you must obtain a disclosure statement signed by the client, which must be kept on file for at least two years. This disclosure statement concerning your license and bond is provided with your CrossLink program.

A contract between you and your client must be in writing. It must also be dated and signed by the client. It must include all of the following information:

• A conspicuous statement in bold face type near the space where the client will sign stating, “You, the buyer, may cancel this contract at any time prior to midnight of the fifth day after the date of the transaction. See the attached notice of cancellation form for an explanation of this right.”
• All of the terms and conditions of payment, including the total payment to be made.
• A full and detailed description of the services you will be performing including an estimated length of time for performing those services.
• Your principal business address and the name and address of your agent that is registered with the state to receive service of process.

The following notice of cancellation must be attached to the contract, but easily detached, with the opening caption “Notice of Cancellation”, and written in bold face type: You must give your clients a copy of all of the statements they sign at the time they are signed. Asking the client to waive any of the provisions listed is considered a violation of the law.

There may be other requirements you must follow as a licensed Credit Services Organization depending on your own unique situation. Please consult with an attorney or the California Attorney General’s office for a thorough list of requirements to ensure your compliance with California laws and regulations.

What Do I Need to Do?
Visit the Office of the Attorney General’s Credit Services Organization Registration website. This site provides the forms you will need to submit, along with the address and other important information.